Baghdad, Iraq – The Rabee Securities Iraq Stock Exchange Index (RSISX Index) declined by 4.9% in May, with performance primarily affected by dividend distributions from two major index constituents, Asiacell and Bank of Baghdad. The decline was further influenced by weaker share price performance from Bank of Baghdad, while gains in Baghdad Soft Drinks helped partially offset broader market weakness.

The RSISX Total Return Index (RSISXTR) declined by a more moderate 1.1% during the month, reflecting the positive contribution of dividend distributions. Bank of Baghdad approved a cash dividend of IQD 0.40 per share, corresponding to a dividend yield of 12.1%, while Asiacell approved a cash dividend of IQD 1.50 per share, representing a yield of 8.7%. These distributions supported the relative outperformance of the RSISXTR Index compared to the RSISX Index, despite continued pressure from weaker share price performance in Bank of Baghdad.

The RS Iraq Banking Index (RSIBX) decreased by 5.7% in May, primarily due to the decline in Bank of Baghdad’s share price. Meanwhile, the RS Iraq Halal Companies Index (RSIHX) fell by 3.6%, reflecting the impact of Asiacell’s dividend distribution. Excluding dividend-related adjustments, the RSIHX would have recorded a gain of 1.0%, supported by positive share price performance from Baghdad Soft Drinks, Asiacell and Al-Mansour Pharmaceuticals Industries.

Tugba Tan Karakaya, Equity Research Analyst at Rabee Securities, said: “While headline index performance was influenced by dividend distributions from several large constituents, underlying market activity remained constructive. Excluding these technical adjustments, a number of key companies continued to record positive share price performance, reflecting ongoing investor interest in fundamentally strong businesses. The significant increase in trading activity during the month also highlights continued liquidity and engagement across the market”.

In May, International Development Bank and Babil Animal & Vegetable Production, which are not included in the Rabee market indices, also announced dividend distributions. International Development Bank approved a cash dividend of IQD 0.15 per share, corresponding to a yield of 14.3%, while Babil Animal & Vegetable Production approved a cash dividend of IQD 0.40 per share, implying a dividend yield of 4.2%.

Trading activity strengthened considerably during the month. Total trading volume on the Iraq Stock Exchange (ISX) increased by 582% compared to April, reaching USD 139.7 million, largely driven by cross-transactions within the banking sector. Excluding cross-transactions, monthly trading volume still increased by 14% month-on-month to USD 20.8 million.

The banking sector accounted for 95.2% of total trading volume, primarily driven by the sale of shareholders’ stakes in Al-Qurtas Islamic Bank to International Smart Card Company (Qi Card). It was followed by the telecom sector (1.5%), industry (1.4%), hotels and tourism (1.0%), services (0.6%), and agriculture (0.3%). Separately, trading activity on the over-the-counter market declined by 83% month-on-month to USD 54.5 thousand.

Market breadth remained positive, with 33 listed companies recording share price gains during May. Among these, 18 companies advanced by more than 5%, while eight companies rose by 10% or more. Mansour Hotel recorded the strongest performance during the month, increasing by 36.6%, followed by Al-Khatem Telecoms, which gained 24.3%.

On the political front, May marked an important step in Iraq’s government formation process as Parliament approved Prime Minister Ali al-Zaidi’s cabinet and endorsed the government’s programme. While several ministerial positions remained vacant, the development reduced political uncertainty and enabled the new administration to begin advancing its economic and governance priorities.

At the same time, the macroeconomic environment remained challenging. Lower oil revenues continued to place pressure on public finances, prompting ongoing discussions with international financial institutions, including the International Monetary Fund and the World Bank, regarding potential financial support measures and economic reforms. Concerns surrounding electricity supply ahead of the summer season, together with broader regional geopolitical risks, also continued to weigh on the economic outlook.

While the formation of a new government has improved the political backdrop, fiscal sustainability, energy security and regional stability remain key factors shaping Iraq’s economic and market outlook in the period ahead.